You need to exit the MySQL console to run your command.
mysql> exit
$ mysql -uroot -ppassword -B database < /path/to/script.sql
The -u indicates user, -p operator indicates the password and -B the database to use. Note that there is no gap between the -p and the password, otherwise MySQL considers the space part of the password. I tend to leave out a space before the username too :) old habits I guess.
The greater and less than operators < and > act as directional indicators for your bash commands. Think of them as 'into'. So the above statement might be stated as follows:
$ database (into) file
If you were dumping the database into a file, your direction would be > toward the file. However, you want to put the file 'into' the database, so the direction is <. Maybe that helps?